Sri Lanka shares at 1-week low on political woes

COLOMBO Feb 12 (Reuters) - Sri Lankan shares fell for a fourth straight session on Friday to a one-week closing low amid growing political uncertainty and low foreign inflows into the market despite post-war economic optimism.

The trading volume fell to its lowest since Jan. 26.

The All-Share Price Index .CSE of the Colombo Stock Exchange closed down 14.87 points, or 0.4 percent, at 3,709.97, its lowest close since Feb. 5.

The bourse has fallen 2.1 percent in the last four sessions, although it hit a record inter-day high on Wednesday.

Tensions have risen in Sri Lanka since the arrest of former army commander and defeated presidential candidate General Sarath Fonseka on Monday on charges of engaging in politics against his president while still in uniform. [ID:nSGE6170M3]

Protests against the arrest continued for the third day with hundreds of lawyers holding a silent protest on Friday after attacks on Fonseka's protestors on the previous two days. Sri Lankan president Mahinda Rajapaksa dissolved the parliament on Tuesday and called for a legislative poll. [ID:SGE61B07P]

"Market gets dragged down with foreign activities seems very low with the elections around the corner and the developments following the arrest of Sarath Fonseka," said Prasanna Chandrasekera, associate director at Asia Securities in Colombo.

Foreigners, who sold net 785.3 million rupees worth of shares in 2009, have sold a net of over 4.3 billion rupees worth of shares so far this year.

The bourse is still up 9.6 percent so far this year, following a 125 percent rally in 2009, one of the biggest in Asia.

Cigarette manufacturer Ceylon Tobacco Company CTC.CM lost 2 percent to 245 rupees, while top-listed private lender Commercial Bank of Ceylon COMB.CM fell 1 percent to 188 rupees.

Environmental Resources Investment GREG.CM, which analysts said had surged without any fundamental reason, closed 11.54 percent weaker at 207 rupees a share.

The day's turnover was 974 million rupees ($12.3 million), more than the 2009 daily average of 593.6 million rupees.

The Sri Lankan rupee LKR= closed stronger at 114.52/57 per dollar, compared with 114.66/68 on high exporter conversion of dollars, dealers said.

The interbank lending rate or call money rate CLIBOR, rose to 9.125 percent from Thursday's 9.086 percent.

For secondary market rates, please see <0#LKBMK=>. ($1=114.545 Sri Lankan rupees) (Editing by Erica Billingham)